Romanian Government Approves Fiscal Measures to Increase Public Revenue

Jul.18.2022
Romanian Government Approves Fiscal Measures to Increase Public Revenue
Romanian government approves financial measures including higher taxes on tobacco, alcohol, and sugary drinks to increase revenue.

The Romanian government has approved a series of financial measures, including an increase in tobacco and alcohol consumption taxes starting from August 1st, and an increase in value-added tax for sugary drinks to 19% from January 1st, 2023, aimed at increasing public revenue.


The government has announced on the website of the Ministry of Finance that the consumption tax on tobacco and alcohol has remained unchanged since 2015.


According to the document, Romania must comply with a European Union directive regarding tobacco, which mandates that the overall consumption tax on cigarettes must make up at least 60% of the weighted average retail price of cigarettes sold.


From January 1st next year, the value-added tax on non-alcoholic beverages containing added sugar, artificial sweeteners, and flavorings will increase from 9% to 19%.


As of January 1, 2023, the government will impose a tax of up to 25% on gambling winnings and up to 40% on the revenue of gambling companies.


According to the draft, companies with annual revenue exceeding 500,000 euros will start paying a profit tax of 16%. Currently, these companies are paying between 1% and 3% in profit tax. In addition, micro-enterprises that do not employ any staff will pay a profit tax of 16% by 2023.


Furthermore, the dividend tax will increase from 5% in 2023 to 8%.


Companies in the trading and service industries are required to accept debit cards, credit cards, or prepaid cards as payment methods if their revenue exceeds €10,000.


In addition, employees who have four dependents are eligible for a tax reduction of up to 45% of their salary if they receive the minimum wage. For employees who earn the minimum wage but do not have dependents, the deduction rate is 20%.


According to the footnotes attached to the document, the government expects its new measures this year to increase budget revenue by 1.195 billion New Lei (approximately 242 million US dollars or 241 million euros), 105.7 billion New Lei by 2023, and a total of 41 billion New Lei in 2024, 2025, and 2026.


The latest data from the department shows that the combined budget revenue for the first five months of 2022 increased by 21.5% year-on-year, reaching 179 billion new lei, while expenditure increased by 15.2% to reach 200 billion new lei. (1 euro = 4.9408 new lei)


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